Treasuries Close Modestly Lower But Well Off Worst Levels

(RTTNews) - After falling sharply in early trading, treasuries regained some ground over the course of the trading day on Friday but still closed modestly lower.

Bond prices briefly turned positive in morning trading but slid back into negative territory over the course of the afternoon. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged up by 2.1 basis points to 2.883 percent.

The ten-year yield ended the session at a new two-month closing high but was well off the nearly three-month intraday high of 2.932 percent set in early trading.

The early weakness among treasuries came on the heels of the release of a report from the Labor Department showing stronger than expected job growth in the month of November.

The report showed that non-farm payroll employment rose by 203,000 jobs in November following a revised increase of 200,000 jobs in October. Economists had been expecting employment to increase by about 180,000 jobs.

With the stronger than expected job growth, the unemployment rate pulled back to 7.0 percent in November from 7.3 percent in October. The unemployment rate had been expected to dip to 7.2 percent.

The bigger than expected decrease pulled the unemployment rate down to its lowest level since hitting 6.8 percent in November of 2008.

While the report initially raised concerns about the outlook for the Federal Reserve's asset purchase program, selling pressure waned shortly afterward.

The subsequent recovery attempt came as traders went bargain hunting, with the high yields increasing the appeal of bonds.

Following the slew of key economic data released over the past week, the economic calendar for next week is relatively light. Traders are still likely to keep an eye on reports on retail sales, weekly jobless claims, and producer prices.

Bond trading could also be impacted by the release of the results of the Treasury Department's auctions of three-year and ten-year notes and thirty-year bonds.